Airbnb, Inc.

ABNB Details

Airbnb, Inc. (NASDAQ: ABNB) operates a platform for stays and experiences to guests worldwide and connects hosts and guests online or through mobile devices to book spaces and experiences. Its listings include private rooms, entire homes, luxury villas, treehouses, castles, and other experiences. The company partners with hosts throughout the process of setting up the listing and provides them with a suite of tools to manage the listings, including scheduling, merchandising, payments, community support, pricing recommendations, and feedback from reviews. The platform for guests enables customizable wish lists, in-application guest-to-host messaging, and a way to leave reviews. ABNB was listed on the NASDAQ on December 10, 2020. As of May 19, 2021, the company’s market capitalization stood at USD 82.14 billion.

USD 2.0 billion Convertible Notes Offering: On March 08, 2021, the company closed a private offering of USD 2.0 billion aggregate principal amount of 0% convertible senior notes due 2026 to qualified institutional buyers. From December 15, 2025, noteholders may convert the notes at any time, at their election, until the close of business on the second scheduled trading date immediately before the maturity date of March 15, 2026. The initial conversion rate is 3.4645 shares of the company’s Class A common stock per USD 1,000 principal amount of notes.

Q1FY21 Results: The company reported a 5.36% increase in net revenue to USD 886.94 million in Q1FY21 (ending March 31, 2021) as compared to USD 841.83 million in Q1FY20. However, the net loss for Q1FY21 was USD 1.17 billion, 3.44x the net loss of USD 340.61 million in Q1FY20, primarily due to loss on repayment of term loans of USD 377.2 million, a USD 292.0 million mark-to-market adjustment for warrants associated with a term loan, and a USD 113.0 million impairment related to an office space in San Francisco. On the operational side, the company reported a sharply increasing trend of long-term stays (of 28 days or more) – 24% of nights booked in Q1FY21 vs. 14% in 2019 – as people are becoming increasingly mobile while working remotely.

Key Risks: The outbreak of COVID-19 and the related travel restrictions imposed by various governments to curb its spread has and may continue to have a material adverse impact on the company's business, which is directly dependent on travel behavior and demand. In addition, any further decline or disruption in the travel and hospitality sector or an economic downturn could hurt ABNB's ability to sustain itself.

Outlook: The company expects that ‘Nights and Experiences Booked’ in Q2FY21 will be significantly higher than the highly depressed levels of Q2FY20, but below that of Q2FY19. It anticipates a positive momentum of recovery experienced in Q1FY21 to be partially offset by the continued uncertainty of travel restrictions and lockdowns in the EMEA region. Also, the company mentions coming out with the most comprehensive update to Airbnb’s service in 12 years on May 24, 2021, as it prepares for the impending travel revival.

ABNB Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Stock Recommendation: ABNB has declined by 31.58% in the past three months and is currently leaning towards the lower end of the 52-week range of USD 121.50 to USD 219.94. The stock is currently trading at 103.2% of its issue price. Considering the attractive valuation of the newly listed company, the rollout of vaccines, and the anticipated relaxation of travel restrictions, we recommend a “BUY” rating on the stock at the closing price of USD 138.19, up by 2.35% as of May 19, 2021. The target price of USD 154.00 represents a Price/Sales multiple of 13.5x on FY22 sales per share of USD 11.40, reflecting its unique competitive advantages and growth potential.

Corsair Gaming, Inc.

CRSR Details

Corsair Gaming, Inc. (NASDAQ: CRSR) is a leading global developer and manufacturer of gear and technology for gamers, content creators, and PC enthusiasts. The company’s product range is split into two segments, namely 1) Gaming and Creator Peripherals, which includes gaming keyboards, mice, headsets, controllers, capture cards, stream decks, USB microphones, studio accessories, etc., and 2) Gaming Components and Systems, comprising power supply units, cooling solutions, computer cases, DRAM modules, and gaming PCs. CRSR was listed on the NASDAQ on September 23, 2020. As of May 19, 2021, the company’s market capitalization stood at USD 2.96 billion.

Persistent Product Innovation: On May 13, 2021, the company launched a new model (VIRTUOSO RGB Wireless XT) in its flagship VIRTUOSO family of premium gaming headsets. The new headset produces incredibly rich, authentic sound and has twice the frequency range of typical gaming headsets.

Robust Q1FY21 Results: The company reported a 71.6% rise in net revenue to USD 529.41 million in Q1FY21 (ending March 31, 2021) compared to USD 308.52 million in Q1FY20. Revenue from the gamer and creator peripherals segment was USD 175.91 million, 135.89% higher than USD 75.86 million in Q1FY20. The company reported a steep growth in net income to USD 46.72 million in Q1FY21 compared to USD 1.22 million in Q1FY20.

Key Risks: CRSR’s success and growth depend on its ability to continuously develop and successfully market new gear and improvements. Its failure to do so may impact the demand for its products. Moreover, CRSR depends on the introduction and success of new third-party high-performance computer hardware (particularly GPUs and CPUs), and sophisticated video games to drive sales of its gear. If these newly introduced GPUs, CPUs, and sophisticated video games are not successful, it may negatively affect the company’s business.

 FY21 Guidance (Source: Earnings Presentation, May 04, 2021)

Outlook: For FY21, the company expects the net revenue to be in the range of USD 1.9 billion to USD 2.1 billion, which translates into 17% YoY growth at the midpoint of the range. The guidance seems conservative when compared to the growth in the previous fiscal, and the management also acknowledged witnessing higher traction than planned on the earnings call. The adjusted EBITDA is expected to range between USD 245.0 million to USD 265.0 million.

CRSR Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Stock Recommendation: CRSR has declined 21.32% in the past three months and is currently trading near the mid-point of the 52-week range of USD 14.09 to USD 51.37. The stock is currently trading at 87.6% of its issue price. Considering strong fundamentals, continuous product launches, and a positive outlook, we recommend a “Buy” rating on the stock at the closing price of USD 31.89, down by 0.53% as of May 19, 2021. The target price of USD 37.10 represents a Price/Equity multiple of 20.5x on FY21E EPS of USD 1.81.